Reliance Power, owned by Indian billionaire Anil Ambani, raised $3bn within a minute when the country's biggest initial public offering was fully subscribed on Tuesday as investors flock to new issues in the booming economy.
Reliance Power received offers for four times the amount it sought to raise in half an hour, with most bids at 450 rupees ($11.5), the top end of the IPO's price band, National Stock Exchange data showed.
The founders have bought 32m shares at 450 rupees, while 228m shares have been offered to the public.
"There is a huge demand especially from retail investors and also from high-net-worth individuals. We were expecting such a response," said Ambareesh Baliga at Karvy Stock Broking.
Reliance Power plans to build power plants across India using funds raised by selling 10 per cent equity in the company, which is 50 per cent owned by utility Reliance Energy.
Reliance Energy shares were down 0.2 per cent at 2,469.80 rupees at 0615 GMT, outperforming a Mumbai market that was down 0.8 per cent.
The Indian stock market has been on a five-year record-breaking bull run and strong flows of foreign funds, including from investors seeking high returns in a market that has, for now, withstood the worst fallout from the US subprime mortgage crisis.
The Indian market hit a record high of 21,206.77 last week, at which point it was up almost 54 per cent from a low in August.
Indian IPO volumes soared to a record in 2007 when $8.3bn was raised from 91 issues, including the $2.3bn issue of DLF, the real estate company, which until Tuesday was India's biggest IPO, according to data from Thomson Financial.
Indian companies are expected to raise $15.8bn from 35 IPOs issues this year, almost twice as much as the record in 2007, according to Thomson Financial.
"The markets are doing very well and investors are getting good returns. There is a fair amount of investor appetite for IPOs," said Ved Prakash Chaturvedi, managing director at Tata Mutual Fund.
Reliance Power has been helped by investors' faith in the family name as a result of the group of companies set up by Ambani's father, tycoon Dhirubhai Ambani.
Founded in 1958 to trade in synthetic yarn, the group expanded to include interests ranging from petrochemicals and refining to exploration and production of oil and gas, textiles, financial services, power, biotechnology and telecommunications
The group was split in 2005 between Anil Ambani, who has interests in telecoms, financials, media and power sectors, and his elder brother Mukesh, who controls India's top listed group, oil and petrochemicals company Reliance Industries.
The Reliance Power issue is being managed by Kotak Mahindra Capital, UBS, ABN AMRO, Deutsche Equities, India Private, Enam Securities, ICICI Securities, JM Financial and JPMorgan.
The benchmark index of the Bombay Stock Exchange rose 47.1 per cent in 2007, recording its strongest growth in four years. It rose nearly 73 per cent in 2003, 13 per cent in 2004, 42 per cent in 2005 and 46.7 per cent in 2006.
In comparison, South Korea's Composite Stock Price Index gained 32 per cent, China's Shanghai Composite Index soared 97 per cent and Japan's Nikkei fell 11 per cent in 2007.
Source : http://www.ft.com/cms/s/0/2321874a-c348-11dc-b083-0000779fd2ac.html?nclick_check=1
